Funflation’s Reality Check: Can Live Entertainment Thrive In A Cost-Conscious World?

Jana Arbanas, Principal, Deloitte & Touche LLP.

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Imagine the lights dimming at a concert and excitement filling the air as the first chord strikes. For many, live events offer an exhilarating escape that they are willing to pay significantly for.

However, beneath this thrill, the industry faces significant challenges. Rising ticket prices and inflation strain the live entertainment sector, raising the question: Is "funflation"—where consumers willingly pay more for live experiences like concerts or sporting events—starting to reach its limits?

Consumer behavior is shifting, and the post-pandemic surge in ticket sales is waning as consumers become more selective with their spending according to a recent study from my organization, Deloitte. The study also reveals that nearly 60% of consumers surveyed have skipped a live event they would have liked to attend in the last year due to h igh costs. The rising expenses of event production, coupled with inflation's impact on consumer spending, has created a perfect storm.

Factors like inconvenient venues, safety concerns and lack of interest in live event options also deter attendance, according to consumers surveyed. Many people now prefer the comfort of home entertainment, aided by the rise of ad-supported streaming services.

Charting A New Path For Live Entertainment

Despite these challenges, the live entertainment industry is not doomed. Our survey also found that 61% of U.S. consumers attended a live event in the past six months. And Allied Market Research estimates the global live events sector was valued at $652.6 billion in 2022, with projections reaching $1.2 trillion by 2032—a compound annual growth rate (CAGR) of 5.9% from 2023 to 2032.

While the live entertainment industry faces challenges, many of those that are succeeding are creating new—more personalized and flexible—relationships with fans. A key element is data-driven personalization, a strategy that can tailor the fan experience across multiple touchpoints, deepening the quality and quantity of connections with fans.

Dynamic pricing strategies—where ticket prices fluctuate based on demand—can also help optimize revenue while offering more affordable options during slower periods. Sports organizations have often implemented this approach successfully, adjusting game ticket costs based on factors like rivalries or high-demand matchups.

Sports franchises have also embraced subscription models, which can provide fans with perks like early ticket access or exclusive content, helping to foster loyalty and create more consistent revenue streams.

Hybrid events—such as hosting a viewing of a major entertainment artist's concert or a live sporting event in local theaters—can also offer communal experiences at lower costs, allowing for greater audience reach without the significant overhead of full-scale productions.

Looking Ahead: The Future Of Live Entertainment

I think the future of live entertainment promises to be even more dynamic, driven by advancements in technology and social integration. Imagine concerts where virtual reality immerses fans in a digital landscape, allowing them to experience performances from perspectives that may have been previously unimaginable. Fans could navigate through 3D environments, interacting with digital avatars of their favorite artists.

Artificial intelligence (AI) is expected to play a pivotal role as well, personalizing the experience for each attendee. Picture an AI-driven system that analyzes audience preferences and moods in real time, adjusting setlists, lighting and even visuals to enhance engagement. This level of personalization could help enable a more unique and tailored experience.

Social integration could also redefine how audiences connect. Imagine someone must miss a concert but their friend creates a shared experience that can transcend physical boundaries. With a combination of spatial audio technology, haptic feedback devices and an interactive live streaming platform, customers could still feel connected to the music, the crowd and the performers, even though they're not physically there.

Furthermore, there could be a rise of community-driven events where audiences can help curate lineups, vote on setlists or influence production elements through apps, transforming spectators into active participants.

The Stage Is Set

By embracing new approaches, the live entertainment industry can not only maintain its relevance but also captivate audiences in ways we have yet to fully realize. In this era where digital and live experiences often intertwine, the value of entertainment could lie in its ability to forge connections—both between fans and artists, and among fans themselves.

Events are no longer just performances: They're becoming immersive experiences that can connect people, tapping into the emotional and communal aspects that help define what it means to be "live."

This article contains general information only; Deloitte is not rendering accounting, business, financial, investment, legal, tax, or other professional advice. Before taking action, you should consult a qualified professional.

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